Business News

Britain should get an extra two years to reduce its budget deficit, despite its failure to comply with a five-year-old decision to cut its government spending deficit.

Ireland is among the states told to continue on its current path, reducing both its debt and deficit, by the European Commission in its annual recommendations to member states.

On the day the Government announced extra measures to deal with the mortgage arrears crisis, the commission urged a solution be found by the end of the year for the “vast majority” of distressed borrowers.

Generally, the commission said, the figures are going in the right direction, with deficits in the eurozone an average of 2.4% of GDP, with the trend continuing this year and next.

Government debt generally in the EU is also expected to decrease this year and depending on structural reforms, the pace of decline could be increased, said commission vice-president, Valdis Dombrovskis.

However, both Britain and Finland have been singled out for failing to reach targets.

Economics commissioner Pierre Moscovici said that Britain did not correct its excessive deficit by the deadline of 2014 to 2015 as requested by the council in 2009. It was at 10.9% in 2009 and 5.2% in 2014 to 2015. It was told to reduce it by an annual average of 1.75% GDP.

“The UK has not carried out effective action so the commission recommends to the council that due to good performance in the UK, the commission proposes a new deadline,” he said.

The commission has not recommended action against Finland, passing the buck to the European Council of member states finance ministers.

Mr Moscovici said the deficit will remain above 3% and this excess could not be explained by exceptional factors as it was in 2014 and the debt will remain above 60% of GDP.

The commission will ask member states to assess the findings and give their opinion within two weeks. “Only after that we will decide whether its necessary to open an excessive deficit procedure,” he said.